Ethereum reaches its goal but still has troublesome performance on market
Ethereum has successfully gone through its first deflationary months, not issuing a single new coin, meaning the network is past its issuance peak and will have fewer coins issued than burned from now on.
As ultrasound.money suggests, Ethereum has been deflationary for more than 30 days, the longest period we have seen. According to the calculation, Ethereum’s supply will slowly start shrinking. However, the effect on the supply will not be as severe as expected by most investors.
The first ever month of negative $ETH issuance
— Evan Van Ness 🦇🔊 (@evan_van_ness) October 20, 2022
By October 2024, Ethereum’s supply will reach the level we saw back during the London update when the burning mechanism was been implemented initially. In the next three years, the supply will reach the pre-ICO era level.
A gradual reduction of the supply is expected to have a positive effect on Ether’s values on the market according to ETH investors and some economists. However, the historical analysis shows that high deflation is not a recipe for success on the market.
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Network usage and revenue are the only things that matter in terms of ETH’s price on the market. The high burning rate and deflation would act as secondary factors. Some anti-PoS influencers believe that Ethereum’s deflation is a negative factor that will cause problems for users interacting with the network and potentially increase usage costs, mostly because of price surges.
However, the price performance of Ether today remains neutral. The second biggest cryptocurrency has not gained or lost any of its value in the last few weeks. The volatility on Ether remains at an extremely low level despite the recovery of the altcoin market we saw recently.
At press time, ETH is trading at $1,263 and consolidating around the lower border of the consolidation range.
Source: https://u.today/30-days-without-new-ethereum-network-celebrates-first-deflationary-month